When claiming child care expenses, you might wonder why parental and maternity benefits aren't considered "earned income." Here's a simplified explanation:

What counts as "earned income":

1. Salaries and wages from employment
2. Self-employment income
3. Disability payments from the Canada Pension Plan or similar provincial plans
4. Certain types of taxable benefits and allowances

Why parental and maternity benefits aren't included:

• These benefits fall under a different category in tax law
• They're treated differently from regular employment income

Impact on child care expense deductions:

• You can't use parental or maternity benefits to increase your child care expense deduction
• This may limit the amount you can claim for child care expenses while on leave

Important notes:

• This distinction is based on specific tax regulations
• It applies even though these benefits are taxable income

What you can do:

1. Calculate your "earned income" without including these benefits
2. Use other sources of earned income to support your child care expense claim
3. Consider timing of child care expenses with periods of other earned income

Remember:

• Keep track of all your income sources separately
• Document your child care expenses throughout the year

If you need help calculating your eligible child care expenses or understanding how different income types affect your deductions, consider consulting with a tax expert. For assistance entering this information in Wealthsimple Tax, please contact Wealthsimple support.